Last Updated on March 15, 2023 by Bitfinsider
MakerDAO, which manages the “decentralized” dai stablecoin, launched an emergency proposal to reduce the amount of DAI that can be minted with other centralized stablecoins after users shifted away from USDC and into competing assets due to concerns about Circle’s exposure to the bankrupt Silicon Valley Bank.
Circle revealed on Friday that $3.3 billion of its $40 billion in reserves stayed at Silicon Valley Bank, which was shut down by regulators last week. Its USDC stablecoin fell from its planned dollar peg to $0.87, resulting in a huge exodus that increased demand for DAI.
The quantity of USDC fell by 5%, to 38.6 billion on March 13 from 41 billion on March 10, when SVB was closed. According to on-chain statistics aggregated by The Block, the quantity of DAI increased to 6.3 billion on March 13 from 5.1 billion the previous day.
The increase in DAI supply was primarily due to USDC investors minting more DAI, as USDC is one of the most common assets that MakerDAO users can secure as security to mint DAI in a 1:1 ratio using a Peg Stability Module (PSM). According to DeFi Llama statistics, USDC now accounts for more than half of DAI’s collateral holdings, along with other crypto and real-world assets.
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